I really don't see the benefit. The hotels WILL sell out, so there's no need for them to negotiate. You really don't get much of a discount Gen Con has to deal with the process and catches the flak every year from unhappy people. Again, I applaud them for their efforts, but unless there's something I'm missing I'd be seriously tempted to wash my hands of it if I were them.
Are you sure about that?
Right now there is just a fraction of the rooms available in downtown hotels that are outside of the housing block. Look at what they cost. Now go back through the endless forum postings of "But there are plenty of rooms available outside of the housing block! Gen Con doesn't need to change anything!". Downtown hotel rooms outside of the housing block are not massive sellouts like you think. Why would you think that every hotel room downtown would immediately sell out if suddenly every hotel was charging the ***rape prices that out of block hotels are asking for now? Do you really believe that them barely selling out now will translate to twice or more still selling out?
Gen Con has a vested interest in keeping hotel prices down to mere price gouging levels. Gen Con wants us to stay downtown for atmosphere and to bargain for more benefits from Indy due to people spending money downtown. Gen Con does not want us to blow all of our money on a hotel instead of in the exhibit hall. Gen Con does not want people to start skipping attending their show because lodging has become insanely expensive.
Similarly, Indy wants to be known as a great city for conventions. With apologies to people living in Indy it really has very little to offer when it comes to enticing people to spend vacation time there, but it is well set up for hosting big groups for conventions. However, it does have competition (just check out all of the "Indy should move here...." threads). Indy cannot afford to be known as the place where you don't want to hold your convention because you get robbed on hotel costs. Indy wants to give a large housing block to Gen Con to hopefully keep it in Indy for many more years to come.
Let's not kid ourselves, even the rates through the housing block are still price gouging. We are talking Indianapolis here, no basic hotel room downtown should cost over $200 a night plus $30+ to park and a 19% (!) room tax. Just, no. Market value be damned, we are being openly gouged. If every hotel is able to charge $400-500 a room, plus that parking and 19% tax, people are going to start deciding that there are better ways to spend their vacation money.
One of the perks of going to Indy is that a large number people can semi-affordably stay downtown for the convention. Once you lose that the idea of moving the convention to Chicago/Vegas/wherever starts to look pretty good.